Court stops insurance firm from cancelling policy of doctors

A total of 1,173 medical professionals have got a major reprieve from the Bombay high court. The court restrained United India Assurance Company from terminating their group medical insurance policy for non-payment of additional premium.

A total of 1,173 medical professionals have got a major reprieve from the Bombay high court. The court restrained United India Assurance Company from terminating their group medical insurance policy for non-payment of additional premium.

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“How can you ask them to pay more premium only because the total amount of claims received by you exceeds the premium received,” said the division bench of Justice DK Deshmukh and Justice KK Tated.

Last week, the court admitted a petition filed by the Federation of Obstetrics and Gynaecological Societies of India for a final hearing while stopping the insurance company from cancelling or terminating the family medical insurance policy of its 1,173 members.

On October 26, 2010, the insurance company issued a letter to the federation stating the group policy would be cancelled if the insured members did not pay additional premium. The company had demanded additional premium of Rs3,453 per member of the insured family, seeking coverage of Rs5 lakh and Rs6,907 per member involving coverage of Rs10 lakh. The federation challenged this in the high court.

Its counsel VR Dhond submitted that the insurance company had demanded an additional premium merely because the claims received by them exceeded the premium paid by insured federation members.

He told the court that through the annual group family medical insurance policy the company had given a cover of Rs72.40 crore to the 1,173 members against a total premium of Rs1.68 crore. He said the company’s demand for additional payment merely because the claims crossed the total premium amount was against the basic concept of insurance.

Counsel for the company, AS Vidyarthi, said the company was suffering losses in the transaction and it would end up clearing claims three times the premium received. The court discarded his contention saying the claims could be compared against the cover and not the premium amount. “Two uncomparables cannot be compared,” the judges said.

The federation members had availed the policy for one year ending on March 30, 2011.